Mk 4010- Review Problems for Quiz 2

Mk 4010- Review Problems for Quiz 2 - Sample Review...

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Sample Review Problems for Quiz 2 This set of problems is not an exhaustive coverage of the content on Quiz 2.) 1. Markup Percent (a) Selling Price (SP) = $400. Markup on Cost = 25%. Find the Cost for this Item. (b) Cost = $250. Selling Price = $325. Find the Markup on Cost in dollars and as a percent of cost. 2. Breakeven Fixed Costs = $10,000. SP = $200. Variable Cost (VC) = $140. (a) Find the breakeven volume in units. (b) Suppose the company has a 20% Return on Sales target. Find the breakeven volume in units that meets this 20% ROS target. (c) Prove that your answer in part (b) actually achieves the 20% ROS objective. 3. With a linear demand function, your demand equation is Q = 3,000 – 50*P. (a) Find Maximum Willingness to Buy (MWB) and Maximum Reservation Price (MRP). (b) Your current price is $30. You are considering a 10% increase in Price. Find the elasticity of this demand function at the point where P = $30. How much will Q decline if you increase P by 10%, given that elasticity? (c) VC = $20. Find optimal price.
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